People may be more willing to pay for clean energy and strategies that dramatically reduce emissions than previous studies have suggested, according to new research by Michigan State University Professor Douglas Bessette and University of Michigan Professor Joseph Árvai, “Engaging Attribute Tradeoffs in Clean Energy Portfolio Development,” published in Energy Policy. Árvai is the Erb Institute’s faculty director.
To prevent global mean temperatures from increasing beyond 2 °C, governments and utilities will need to make drastic changes to electrical infrastructure, including relying more on clean energy and using carbon capture and storage. Many factors are at play, but the cost of these changes and people’s willingness to pay for them usually are at the forefront of strategic planning and political discourse.
Studies that measure the public’s willingness to pay often rely on vague policy options, ignore important social and environmental attributes, and do not give people a way to analyze trade-offs, the researchers noted. Studies that don’t make the costs and benefits clear may not accurately gauge people’s willingness to pay, they argued.
So Bessette and Árvai conducted three studies on people’s willingness to pay for clean energy and transition strategies in the U.S. and Canada. They gave participants multiple-choice tasks for evaluating real-world portfolio options, including key social and environmental attributes. For some participants, the tasks included constructing an energy portfolio.
“Our results show that individuals placed high importance on minimizing costs, yet also consistently ranked strategies highest that reduced both greenhouse gas (GHG) and air particulate emissions, even when those portfolios require considerable cost increases,” the researchers wrote.
Árvai opined that, in making decisions about energy, people ought to consider numerous attributes, including its impact on air quality and mitigating GHG emissions; its risk to human health; its impact on employment, national security, wildlife habitat and biodiversity; the changes to local landscapes or land use it might require (as with wind energy); and how much it relies on risky technologies or technical, social or market innovations.
“Making clear how different energy plans perform across such attributes is certainly important; however, simply expanding the range of attributes people consider may not go far enough,” the researchers explained. “This is due to the technical and cognitive complexity associated with recognizing and confronting tradeoffs between attributes, a complexity which increases with the number of attributes included.” In these situations, people may rely on mental shortcuts and systematic biases, so structuring decision processes, working to “de-bias” choices, and breaking complex problems into more manageable steps can help, the researchers said.
The three studies
The researchers conducted three studies between 2014 and 2016. The first two used an interactive energy system model and online interface; participants could build their own energy portfolio options and then engage in two choice tasks. Bessette and Árvai’s previous research had shown that allowing people to put together their own portfolios improves their energy literacy and understanding of how energy systems work. The third study used two choice tasks to examine national-scale energy plans and attributes.
All three studies provided relevant social and environmental attributes and multiple methods to investigate trade-offs among them. “Across all three tasks, participants ranked, weighted, preferred and constructed options that were both costly and significantly reduced GHG and air particulate emissions,” the researchers noted.
Most of the studies’ participants rejected the status quo, which suggests that a majority in both the U.S. and Canada support transitioning toward energy systems that mitigate emissions, primarily through the deployment of renewables.
In one of the studies, the highest-ranked portfolio option relied on efficiency improvements—an option that is “plagued by public misunderstanding,” the researchers wrote. Their results “suggest that focusing people’s attention on the additional benefits of efficiency improvements, i.e., not just the long-term cost savings, but also the reduced emissions, may motivate adoption.”
Overall, minimizing cost was important to participants, but “delineating the social and environmental health benefits alongside those costs—and providing means to explore the tradeoffs between those benefits and costs—generated higher [willingness to pay] for clean energy portfolios” than previous research has found, Bessette and Árvai wrote. And the stakes are high. “Considering the serious consequences of unmitigated emissions, working to improve the processes by which we elicit the public’s willingness to pay for clean energy is critical.”